Mountain House Transformation: $29k In Bookings The First Week!

[Michael Elefante]

I have three short term rentals that I rent out on Airbnb. This mountain house was a different project for me. The house had great bones and structural integrity, but just needed a little love. We finished October 14 and listed on Airbnb and VRBO. Within the first week, we have had over $29k in bookings between Oct 16-Dec 31 2020! This has surpassed my original forecasts. We are now forecasting to bring in around $125k in revenue and net around $75k during the first 12 months! That's around $6,500/ month cash flow on average. Crazy returns... Has anyone else had success flipping and renting houses out in hot STR markets? I also create some content on YouTube, focused around my experience on short term rentals, Airbnb, etc if anybody has interest in seeing how I evaluate properties, furnish them, etc. :) Let me know what you all think and if you have any suggestions, questions or comments.

[Michael Elefante]

@Caitlin Elgin I think creating something that I felt was unique and different to the area has helped us stand out. This isn't the traditional mountain cabin you see in Gatlinburg / Pigeon Forge area. Our goal was to create a modern/rustic house that differed from the typical all wood cabin. Additionally, as I mention below, we are able to sleep 16 guests comfortably, bumping it up from the previous owners that had it sleeping only 12 guests. 

@Luke Carl I actually purchased this home through Gennifer Mix who works with you and @Avery Carl. Your team has been a terrific help to us throughout this past year, evaluating properties and also helpful tips to run STRs smoothly. We do not clean ourselves - we have a cleaning service come and turn the property for us between guests.

@Nathan Gesner

The numbers...

We financed the house. 
Asking price was $550k
4 BR, 3.2 baths, ~3,000 sq/ft

We spent $49k all in for fixing it up, furnishing, deep clean, all that good stuff. The vast majority of this was cosmetic. New floors upstairs, new stairs, new paint, new furniture, light fixtures, toilets, ceiling fans, etc etc.. 

By adding more beds (two queen over queen bunk beds) we bumped the sleeping capacity from what was originally 12 guests, to 16 guests. We can charge quite a bit more by fitting 4 additional people in the house. 

I have a much more detailed spreadsheet of how I evaluate investments like this, but my numbers are based on the following general numbers for this house: 

Nightly Rate avg: $550
Estimated Occupancy: 228 nights per year or ~62% occupancy rate
Equates to gross revenue annual: $125,400
Projected Monthly Revenue: $10,450

Keep in mind this is an average and the mountains are seasonal. Summer months and holidays can be above this number with more week long family vacations, while Jan-Feb (slower months) tend to be slower..

Expenses:
Mortgage (Prin, Int, Tax and PMI): $2,596
Est. Operational expenses (utilities, pest, lawn care, wifi, future maintenance, repairs, HOA, automation tools etc): $1,145
Total expenses Monthly: $3,741

Monthly Cash flow: Revenue - Expenses: $10,450 - 3,741 = $6,709
Annual Cash Flow: $6,709 x 12 months = $80,508
I mentioned in my post $75k so I could account for Airbnb service fees (around 3% for hosts) and other unforeseen costs to be conservative.. 

I self manage. We have a good cleaning service and a handyman on call for us. I use YourPorter for management and automation purposes and pricelabs for dynamic pricing. 

Happy to provide more details regarding the CoC return and Total ROI metrics upon request

Also, I honestly don't know what the ARV is... I do know how much other 4 BR, ~3,000 sq/ft houses are going for in the area and it quite significantly more than what we got this place for.. The vast majority of STRs bought and sold in this area are turn key properties. I think this gave us an advantage to get in for a better price, have some money to fix it up, make it unique and rent it out at premium dollar. This house was sitting on the market for a while before we picked it up!

Any comments or suggestions are welcome! I still have a TON to learn, so I am all ears. Thank you all for your input!